MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING FRIDAY, MAY 15 1998 (1)
NORTH AMERICAN, EUROPEAN AND ASIAN MARKET ACTIVITY OVERVIEW
Toronto Stocks Trade Flat Ahead of Long Weekend - Other Canadian Markets Were Mixed.
Canadian stocks nudged slightly higher as gold issues like Barrick Gold Corp. and utilities tempered declines in banks and metals.
The Toronto market traded in a narrow range throughout the day, lacking any significant news and closed flat after a light day of trading.
''It was a thin day before the holiday weekend and you had some stocks pushed around both ways,'' said Dave Picton, a portfolio manager at Synergy Mutual Funds. ''We had a few groups that held up the performance here and it was a better day for Canada for a change.''
The Toronto market's slight advance contrasted with the Dow's significant fall as U.S.-based traders expressed concern over the ongoing crisis in Indonesia, Picton said.
The Toronto Stock Exchange's key 300 composite index rose 6.17 points or 0.8 percent to 7684.02. About 82.8 million shares changed hands on the TSE, down from 91.8 million shares traded on Thursday. Friday's gain was the first in three days. Volume was a light and worth C$1.55 billion. Advancers outpaced decliners 526 to 488 with 290 issues unchanged.
For the week, the benchmark fell 15.22 points or 0.2%.
The big winners Friday on the TSE were gold and precious metals, up 1.45 per cent; utilities, which gained 1.32 per cent; and communications, up 0.91 per cent.
The biggest losers were metals and mining, down 1.16 per cent; transportation, which gave up 0.97 per cent; and paper and forest products, off 0.47 per cent.
For the week, six of the 14 groups rose. Utilities led the way, gaining 3.21 per cent, consumer products were up 1.99 per cent, and industrial products rose 0.65 per cent.
The biggest decliner for the week was metals and mining, down 4.14 per cent, followed by paper and forest products, which fell 2.15 per cent, and real estate, down 2.02 per cent.
SNC-Lavalin (snc/tse) fell $0.15 to $13.05. The company announced Friday it has won a $100-million contract for its part in a $1.9-billion aluminum smelter to be built in Maputo, Mozambique.
Bullion rose as Asian investors sought safe haven for their money in the face of civil unrest. Bullion jumped US$1.40 to US$301.20 an ounce on the Comex division of the New York Mercantile Exchange. The TSE's gold and precious minerals subindex rose 103.63 points, or 1.5%. Barrick Gold (abx/tse) gained 35› to $31.80, Euro-Nevada Mining Corp. (en/tse) rose 55› to $24.60 and Placer Dome Inc. climbed C$0.40 to C$20.85.
"That put the strength in the TSE 300," said Fred Ketchen, chief equities trader at ScotiaMcLeod in Toronto.
On Bay Street, the utilities sector was led higher by telecommunications firms such as Newtel Enterprises, which gained $4.75 to $45.00 and QuebecTel Group up $4.00 to $42.00. Teleglobe Inc. (tgo/tse) rose $4.65 to $74 after it reported Thursday that its first-quarter profit rose 49% to 58› a share, from 43› a year earlier.
"Somebody has rung up something really good here," said Ketchen.
The communications index gained from the continuing battle for control of WIC Western International Communications between Shaw Communications and CanWest Global. WIC B shares rose $1.00 to $45.50, while CanWest Global shares gained 60 cents to $27.10.
Tempering the gains was 0.4 percent drop in the banking sector. Banks fell as the C$ edged lower. Canadian Imperial Bank of Commerce (cm/tse) fell 30› to $49.85, Royal Bank of Canada (ry/tse) lost 40› to $85.50, Bank of Montreal (bmo/tse) slipped 75› to C$77.25 and Toronto Dominion Bank (td/tse) fell 35› to $63.65.
Power Corp.(pow/tse) shares rose $1.95 to $63.25 after reporting sharply higher first quarter earnings Friday. The company posting net profits of $109 million for the three months ended March 31, 50 per cent higher than the same period last year.
Investors also will be watching the U.S. Federal Reserve Tuesday to see if it raises interest rates.
The transportation index was led lower by CNR, which dropped $1.15 to $89.20. Ketchen attributed the loss to profit-taking.
Among industrials, Fairfax Financial gained $12.00 and George Weston lost $4.25 to $144.00.
Smed shares (SM/TSE) closed at $30.05, up $2.55. Smed International Inc. shares rose 9.3% Friday after the Calgary furniture manufacturer reported a fourfold increase in third-quarter earnings.
Derlan Industries Ltd. is closing in on a major U.S. military contract, but the Asian economic downturn affecting its semiconductor business may rain on the party. Toronto-based Derlan is the lone bidder left in negotiations with Boeing Co. for the transmission on the AH64 Apache attack helicopter, shareholders were told at the annual meeting Friday. The deal is potentially worth $500 million over 10 years, adding to Derlan's $576-million order backlog. But while chairman and chief executive Dermot Coughlan said later a decision by Boeing is "imminent," Derlan shares (Drl/TSE) closed down 15› at $4.80 Friday.
Hammered by a drop in key Asian markets, struggling Singer Co. NV says it expects another quarter of losses before turning the corner to a profitable year. The sewing machine and consumer durables maker, which is controlled by Markham, Ont.-based Semi-Tech Corp., said Friday it lost US$15.5 million (US33› a share) on revenue of US$312 million in the quarter. That compares with a profit of US$17.1 million (US33›) on revenue of US$304 million a year ago. Singer's stock (SEW/NYSE) closed up 1/4 at US$91/16 Friday. Semi-Tech shares (SEMa/TSE) closed unchanged
Molson Companies A shares rose 85 cents to $28 on the Toronto stock market Friday. Net profit jumped to $143.8 million for the year ended April 1, which appears to be a dramatic improvement over the net loss of $16.8 million the previous year, the Toronto-based company said Friday.
Under the oils sub-index, Renaissance rose $0.65 to $26.20; Penn West Petrol fell $1.00 to $17.00.
Among mines, Rayrock Yellowknife Resources climbed $1.45 to $6.50.
Metal issues fell on concerns that Asian political and economic problems will slow demand for commodities, reducing profits of producers. Alcan Aluminium Ltd. (al/tse) lost 75› to $45.60 and Inco Ltd. (n/tse) slipped 60› to $22.60.
Other Canadian markets were mixed. The Montreal Exchange portfolio fell 6.74 points, or 0.2%, to 3869.13, a gain of 0.92 of a point on the week. The Vancouver Stock Exchange rose 2.85 points, or 0.5%, to 620.75, a loss of 11.03 points, or 1.7%, since last Friday. The Alberta Stock Exchange combined value index fell 3.93 with 156 issues advancing, 169 declining with 130 unchanged.
Donner Minerals shares (DML/VSE) closed at $2.01 Friday, down 5›, while Northern Abitibi (NAI/ASE) ended the day at $1.12, off 8›. A plunge this week in the shares of two junior mining firms drilling for nickel in Labrador has once again raised concerns someone is leaking news about the project. The stock of Donner Minerals Ltd. and Northern Abitibi Mining Corp. began to drop suddenly Tuesday on no news.
On Thursday morning, about 3 1/2 hours into the trading day, the Vancouver and Alberta exchanges halted trading in bothnstocks. They asked the firms to publish results from their joint drilling program in South Voisey's Bay after the two companies confirmed there was no new information to report.
Donner had lost about 25% of its value, Northern Abitibi 35%.
"It reflects very badly on the companies when they have movement on no news," Angela Huxham, director of surveillance at the VSE, said Friday.
High-Tech Earnings Crunch Keeps Pressure On Wall Street
U.S. stocks fell, led by computer-chip makers, amid concern that weak Asian economies are hurting demand for computer products after National Semiconductor Corp. warned it will lose money until the end of the summer.
The Dow Jones industrial average fell 76.23 points, or 0.8%, to 9096, but rose 40.85 points, or 0.5%, on the week.
The Standard & Poor's 500 composite index slumped 8.64 points, or 0.8%, to 1108.73, down 0.59 of a point on the week.
About 617.1 million shares changed hands on the Big Board, up from 579.3 million shares traded on Thursday.
The Nasdaq composite index declined 18.59 points, or 1%, to 1846.77, down 17.6 points, or 0.9%, since last Friday.
Technology was again the most contentious sector Friday on Wall Street, but unlike the prior day's action, there was no counterbalance to its negative influences. Some hesitation was expected ahead of the Fed's meeting next week, but losses on broader markets accumulate in the late afternoon.
Tech stocks were hamstrung by Thursday night's profit warning from National Semiconductor (NSM), plus more negative comments from an influential analyst about Intel (INTC). Additionally, Hewlett Packard (HWP) confirmed its warning by posting weaker-than-expected second quarter results. Other PC makers were also weak, as were big Internet stocks.
In broader markets, most sectors drifted lower save for gold, which enjoyed a burst thanks to the political instability in Indonesia and the Asian sub-continent. In keeping with recent trends, trading volume was unimpressive and the majority of stocks were declining on both the Big Board and Nasdaq markets.
The Dow Jones Industrial Average ($INDUA) rose modestly and briefly in the morning, hitting a high of 9,185.68. Those gains soon eroded, and save for a brief flurry above break-even around 11 a.m. EDT, the blue chip proxy spent much of the session between 5 and 20 points below its opening level. At about 2 p.m., the weakness accelerated, taking the Dow to its intraday low at 81.03 points down. The index finished the session down 76.23 points down at 9,096.00.
The Nasdaq Composite Index (COMP) didn't even enjoy a short-lived rise like its blue-chip counterpart. The tech-entrenched index fell from the opening bell, and losses built through the morning and into the afternoon. The Nasdaq fell as low as 20 points down before closing off 18.59 at 1,846.77.
The S&P 500 (SPX) closed off 8.64 at 1,108.73, and the Russell 2000 Index ($IUX) dipped 3.11 to 472.44.
In NYSE trading, 618 million shares were exchanged and advancers trailed declining stocks by an 11-to-17 spread. In Nasdaq activity, 754 million shares traded hands and the breadth of the market favored decliners by a 13-to-9 margin.
In economic news, the Federal Reserve reported that industrial production totaled 0.1% in April while capacity utilization dipped to 81.9%, the lowest level in two years. The industrial production figures were down from a 0.3% rise in March, but higher than expectations for a 0.2% drop.
Separately, the University of Michigan's consumer-sentiment index fell to 105.2 in May from 108.7 for the final April index. The current conditions component also retreated to 111.5 in early May from 115.5 in the final April survey, they said.
The data mainly canceled each other out in terms of market implications and bond trading was predictably sluggish ahead of the FOMC meeting next Tuesday. Bond prices rose more than 1/8 of a point, sending the yield on the benchmark 30-year Treasury bond down to 5.98%.
Technology Stocks
The Morgan Stanley High Tech Index (MSH) fell 12.76 to 576.59 and the Nasdaq 100 Index (NDX) dipped 16.61 to 1,249.49, but most of the damage was concentrated in the chip sector. The Philadelphia Semiconductor Index (SOX) tumbled 14.35 to 292.82, or 4.67%.
National Semiconductor (NSM) got the sector off to a bad start late Thursday, when it warned that its fiscal fourth-quarter loss will be wider than the 20-cents-per-share shortfall analysts expected. In addition, the chip concern said it will also be in the red in its fiscal first quarter, due to ongoing inventory correction and product transition issues. National Semiconductor shares fell 1 9/16 to 17 5/16.
Chip stocks took a further hit when Merrill Lynch chip analyst Tom Kurlak warned of a looming oversupply of microprocessors that would create downward pricing pressures throughout the sector. Specifically, Intel (INTC) now has the capacity to make more microprocessors than the market needs, he said.
Every major chip maker finished down on the session as Intel closed off 4 1/4 to 80 5/16, SGS-Thomson Microelectronics (STM) shed 2 3/16 to 85 1/2, and KLA-Tencor (KLAC) lost 1 9/15 to 38 7/16.
Additionally, Advanced Micro Devices (AMD) shed 2 7/8 to 22 1/4; Novellus (NVLS) fell 2 27/32 to 42 7/8; Micron Technology (MU) closed down 2 3/16 at 26 3/8; Texas Instruments (TXN) slid 3 to 59 1/8; and Lattice Semiconductor (LSCC) fell 2 1/4 to 44 7/16.
Prospects for cheaper chips did not aid the PC makers, however. Dell Computer (DELL) was particularly weak, falling 5 1/4 to 90. Additionally, Compaq Computer (CPQ) slid 1 3/16 to 30 3/8 and Gateway (GTW) closed off 2 3/16 to 50 1/16.
Dow component Hewlett-Packard (HWP) slipped 11/16 to 69 5/8 after reporting that its fiscal second-quarter earnings fell 13% to 65 cents per share, due to weakness in Asian markets, high business expenses and a price war in the personal-computer business.
Other big tech stocks under selling pressure Friday included IBM (IBM), off 1 to 124 13/16; Seagate Technologies (SEG), down 5/8 to 25 1/2; Computer Associates (CA), off 1 9/16 to 56 1/2; and Automatic Data Processing (AUD), down 1 5/16 to 65.
Internet stocks were also weak, led by Lycos (LCOS), whose shares plummeted 4 5/8 to 64 3/8. Late Thursday, the firm reported losing 15 cents per share in its fiscal third quarter, but that was 3 cents better than expectations. The Internet search engine said its revenues rose 160% in the quarter compared with the prior year.
Elsewhere in the sector, America Online (AOL) dipped 2 3/4 to 85; Amazon.com (AMZN) slid 1 15/16 to 89 5/8; Excite (XCIT) lost 1 27/32 to 59 15/16; and Yahoo! (YHOO) closed off 2 3/16 to 118 1/16.
Proving that not all the enthusiasm for Internet stocks has waned, Pivot Rules (PVTR) jumped 1 5/8 to 3 5/8 on news it will launch an online retailing effort. The clothing designer also posted a second quarter loss of 11 cents per share.
OnSale Inc. (ONSL) rose 7/8 to 31 1/2 as the Internet retailer said it formed a joint venture with privately held Softbank Corp., the largest software distributor in Japan, to perform online auctions for the Japanese audience. The joint venture will be owned 60% by Softbank and 40% by OnSale.
Track Data (TRAC) jumped 15/16 to 6 9/16 a day after the company launched a new Internet-based investment tool for online trading.
Microsoft Corp. (MSFT) failed to bolster the broader technology sector, but rose 1/2 to 89 7/16. The software giant won a temporary reprieve on Thursday from major new government antitrust lawsuits by agreeing to delay release of its upcoming Windows 98 for a few days.
IBS Interactive (IBSX) rose 2 1/8 to 8 1/8 in the computer networking company's first day of trading after selling 1.2 million shares at 6 in a $7.2 million initial public offering.
Synopsys (SNPS) rose 1 7/16 to 44 5/8 after Business Week reported the software company's shares could reach the mid-50s in about a year.
Xybernaut (XYBR) rose as high as 12 1/2 but closed off 1 7/16 at 7. Sony Corp.'s (SNE) Sony Digital Products announced that it will make Xybernaut's Mobile Assistant IV, a wearable computer designed for workers who need unfettered use of their hands. Sony shares fell fractionally.
Amtech (AMTC) rose 9/16 to 4 1/4 after the software developer posted first quarter profits of 2 cents per share, reversing a loss of 22 cents per share a year ago.
Active Issues
Walt Disney (DIS) exerted the greatest negative influence on the Dow, falling 5 5/16 to 110 3/4. The media and entertainment company filed to sell as much as $4.3 billion of common or preferred stock, debt securities or warrants to buy its debt or stock. Schroder & Co.
downgraded Disney stock to "outperform" from "outperform significantly," while Merrill Lynch cut its rating to "near-term neutral" from "accumulate."
Other big decliners included Alcoa (AA), down 2 1/8 to 74; General Electric (GE), down 1 1/2 to 82 5/8; Caterpillar (CAT); off 1 1/16 at 57 13/16; and International Paper (IP), which slid 1 3/4 to 53 1/4.
Merck (MRK) rose as high as 120 1/8 but closed off 1 5/16 to 116 3/4. The company announced Thursday that the U.S. Food and Drug Administration has approved its Aggrastat drug to combat the risk of death, heart attack or heart problems in angina patients.
Dow gainers included financial components J.P. Morgan (JPM), up 2 to 130 15/16, and Travelers Group (TRV), which rose 1 7/8 to 63 5/8. Additionally, Exxon (XON) closed up 1/16 at 73 11/16.
Sears Roebuck (S) climbed 1 15/16 to 63 1/2. Late Thursday, the retailer said it signed a multi-year agreement with Total System Services (TSS) for credit-card processing and support. Total System rose 1 1/4 to 23 1/4.
J.C. Penney Co. (JCP) fell 1/8 to 70 15/16 after the fourth-largest U.S. retailer said net income for its first quarter rose to 64 cents per share, 2 cents better than Street expectations.
Ergo Sciences (ERGO) plummeted more than 50%, off 7 9/16 to 6 1/4, after an FDA panel rejected its oral treatment for diabetes.
Big drug makers were mixed but with a negative bias as the AMEX Pharmaceutical Index (DRG) fell 3.69 to 633.28. Leading the decliners were Pfizer (PFE), down 3 1/2 to 104 1/2; Warner-Lambert (WLA), down 1 1/8 to 188 3/16; and Centocor (CNTO), which fell 2 3/16 to 41 3/4. Gainers were led by Abbott Laboratories (ABT), up 1 15/16 to 74 7/16.
Gene Logic Inc. (GLGC) fell 3/8 to 7 7/8 after rising as high as 9 5/8 intraday. SmithKline Beecham (SBH) will license Gene Logic's Object Protocol Model-based bioinformatics system and software, and will collaborate with Gene Logic to develop a series of genomic biological databases. SmithKline Beecham shares fell fractionally.
Transportation stocks gave up some recent gains as the Dow Transporation Average ($TRAN) fell 35.08 to 3,424.73. Weakness in shipping concerns led the decline although the AMEX Airline Index (XAL) shed 7.10 to 712.81.
In the shipping and trucking sector, USFreightways (USFC), Xtra Corp. (XTR), and FDX Corp. (FDX) each fell more than 1 point, as did flyer US Airways (U).
Oil stocks also stumbled as the Philadelphia Oil Service Index (OSX) slid 2.45 to 112.75 and the AMEX Oil Index (XOI) lost 4.20 to 493.75.
Leading the declines were Diamond Offshore (DO), Smith International (SII), and oil producers Atlantic Richfield (ARC), British Petroleum (BP),TOTAL (TOT), and Texaco (TX).
Gold stocks were on the rise after gold prices gained overnight on safe haven buying spurred by the chaos in Indonesia, traders said. The AMEX Gold Bugs Index (HUI) closed up 1.26 to 111.08. Barrick Gold (ABX) and Newmont Mining (NEM) each rose fractionally.
Banking stocks held up well as the Philadelphia KBW Banking Index (BKX) rose 1.86 to 852.94. In addition to Dow members, Citicorp (CCI) led the rise, up 4 1/8 to 153 1/8, while Chase Manhattan Bank (CMB) gained 2 11/16 to 142.
Among big percentage moves, FPA Medical Management (FPAM) fell 5 1/2 to 6 after the health-care cost-containment company said first quarter earnings fell to 1 cent per diluted share, far below analyst estimates of 31-cents-per-share profits. The company said earnings were hurt by increased interest expense and a 10% increase in outstanding shares.
BellSouth (BLS) dipped 1 13/16 to 66 3/8 after a U.S. Appeals Court rejected the company's challenge to electronic-publishing restrictions in the 1996 Telecommunications Act.
Gardenburger (GBUR), whose shares had risen in anticipation of the roll-out of its first national media campaign in last night's final episode of "Seinfeld," fell 2 3/4 to 11 11/16 the day after.
Recycling Industries (RECY) shed 1 1/8 to 6 a day after underwriters delayed its debt offering due to a lack of demand.
Comfort Systems USA (FIX) registered to sell about 3.7 million common shares in a secondary offering, and its shares fell 1 5/8 to 21 7/16.
Separately, disappointing first-quarter earnings sent shares of Harvey Entertainment (HRVY) down 1 3/16 to 10 1/2 and Optimal Robotics (OPMRF) off 1 5/8 to 9 3/4.
A bullish meeting with analysts sparked upgrades and helped lift shares of PECO Energy (PE) up 2 5/8 to 26 1/4.
Dain Rauscher (DRC) rose 1 9/16 to 55 11/16 upon receiving a new "buy" rating from CS First Boston.
Owens Illinois (OI) gained 2 to 43 7/8 after registering to sell $2.7 billion of stock and debt. Proceeds are to be used to pay down existing debt.
Roper Industries (ROP) climbed 2 1/8 to 32 7/8 after it reported second quarter earnings of 33 cents per share, in line with expectations.
Columbia/HCA Healthcare (COL) rose 3/4 to 33 5/16 after the company's CEO told shareholders that the firm is making progress in talks with the U.S. government about its fraud investigation of the company.
After The Bell
Waste Management Inc. (WMX) announced that it will slash its quarterly dividend to conserve cash, and will take a second-quarter pretax charge of $70 million to $90 million for costs related to the Year 2000 bug. The moves come two months after the beleaguered company agreed to be bought by rival USA Waste (UW) for $21.8 billion.
Home Depot Corp. (HD) announced that its first-quarter earnings, scheduled for release Tuesday, are expected to rise to 42 cents per diluted share, in line with analyst estimates. The company said sales figures are being boosted by homeowners splurging on redecorating and renovating their homes.
Mellon Bank Corp. (MEL) plans to sell its commercial mortgage servicing business, including $17 billion of servicing rights, and focus its energies on the residential mortgage-servicing business, company officials said. Mellon hired Goldman, Sachs to seek buyers.
Lockheed Martin (LMT) expects to begin delivery of its C-130J transport plane in July, bringing an end to the cost, schedule and test problems that have dogged the aircraft for years, company officials said.
Gannett Co. (GCI) reported that it will acquire several newspapers in New Jersey, including the Morristown Daily Record, from the Goodson Newspaper Group.
Reinsurance company Life Re Corp. (LRE) announced it will acquire North American Financial Services, the parent of Atlas Life Insurance Co. of Tulsa, Okla., which has statutory assets of $200 million.
800 Travel Systems (IFLY) announced that its first-quarter revenues rose 25% over those of the year-ago period, and the company's net loss of $169,000 represented a 50% improvement over results of the year before.
Video Services Corp. (VS) reported third-quarter earnings of 2 cents per share, an improvement from an 11-cents-per-share loss in the year ago period. Analyst estimates were unavailable.
Medical Resources Inc. (MRII) warned that it expects to report a loss for its fourth quarter of $45 million to $50 million because of reserve adjustments and other charges related to its imaging business. |
